2021 Digital Ad Ecosystem - IAB Outlook Galvanizing a reset for future consumer-centric success - Interactive ...
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
IAB Outlook 2021 Digital Ad Ecosystem Galvanizing a reset for future consumer-centric success. March 2021
Table of contents
Introduction 3
How and why the advertising-supported digital ecosystem is at an inflection
point, and how to prepare for and direct what’s next
Methodology and approach 5
Section 1 7-13
The consumer in focus
• Take care of your consumers, or your competitors will
• Defining what “value” means to consumers
• The consumer attention war helps unlock new purchase norms
• Consumer sentiment watchlist: The growing trust gap
Section 2 14-20
Forecasted growth (in a highly fragmented and uncertain environment)
• Lessons learned from 2020—which new digital behaviors will stick?
• Risks and opportunities in defining and adopting future consumer identity and attribution models
• New consumer identity patterns foster a director-to-consumer imperative
• 5G: Innovating digital consumer experience
Section 3 21-28
Unlocking the value of changes that are impacting the digital
advertising-supported ecosystem
• Capturing new consumer purchasing paths: Moving from impressions to outcomes as marketing
is redefined
• Human + machine: Why digital advertising needs an “and” strategy
• Innovation priorities for key digital ad participants
Section 4 29-32
Additional industry considerations and imperatives
• Balancing business as usual with the digital imperative
Next steps 33
A letter from David Cohen, CEO of IAB
2 PwC | IAB Outlook: 2021 Digital Ad Ecosystem
Introduction: How and why the advertising-supported digital ecosystem is at an inflection point, and how to prepare for and direct what’s next 3 PwC | IAB Outlook: 2021 Digital Ad Ecosystem
Introduction
While there is much optimism around the tectonic shifts—
and subsequent growth opportunities—across the entire digital
advertising-supported ecosystem, there is also an undercurrent
of pessimism driven by the belief that not all players are currently
equipped to embrace new models and thrive. While the worry is
legitimate, it can also be lethal: the greatest and most immediate
threat to growth of the digital advertising-supported ecosystem is
inaction by key players.
IAB and PwC partnered to help unravel the complexity and share a vision for the way forward. We identified
the next three years as critical to setting tangible strategies and implementing operational changes.
This short-range view permits major shifts to land and the industry’s different organizations to reset their
courses toward long-term growth.
To inform this vision, we interviewed more than 20 industry leaders across the advertising-supported
internet ecosystem.
Our purpose is to help all stakeholders better understand and work together to:
• adapt to changes accelerated in 2020 (including enhanced consumer time and engagement with
digitally enabled experiences and content)
• navigate an environment with competing priorities and, in some areas, significant headwinds
• pave the way for long-term growth
What do industry leaders see on the horizon for digital advertising?
This report surfaces how organizations are responding to current, imminent and proposed
industry change (including new identity and attribution models). The interviewees revealed that
while capabilities and investment potential vary widely across the digital ad ecosystem, there is little
empathy for those sitting on the sidelines.
Key players agree on a clear need for action: an urgency to focus on consumer-centric values and
experiences, and to drop antiquated models in the industry value exchange. The industry’s thought
leaders know and embrace the fact that this ecosystem is at an inflection point, with future industry
models and solutions being developed today that will likely underpin the industry for decades.
The IAB Outlook: 2021 Digital Ad Ecosystem study has the central hypothesis that the industry
is at a pivotal moment: new technology and operating models require a reset in measurement
and attribution. Moreover, changing go-to-market strategies and innovation in the experiences we offer
consumers is mandatory for survival.
This report shares reasons why industry leaders have concerns, provides insight into shared challenges
and offers next steps to resetting the future of the advertising-supported internet.
4 PwC | IAB Outlook: 2021 Digital Ad Ecosystem
Methodology and approach 5 PwC | IAB Outlook: 2021 Digital Ad Ecosystem
Methodology and approach
To develop a perspective on where the ecosystem needs to focus
to unlock the growth potential of advertising-supported digital
experiences, PwC conducted a series of candid interviews with
20+ industry leaders across the buy-and-sell side of the ecosystem.
Responses per company are confidential. Executives interviewed spanned a variety of functions and
roles (e.g., CMOs, CIOs, CROs, Business Development), and represented the following company types:
Agencies, Brands, Publishers, OEM Manufacturers of digitally connected devices, Retail/Media, Tech
Providers (Advertising and Marketing), and Telecommunications/Media.
PwC then embedded additional inputs from IAB Research, IAB Tech Lab and members of the IAB
executive team. PwC incorporated relevant insights from PwC’s award-winning Consumer Intelligence
Series, Entertainment and Media Outlook and market-impact studies. High-level observations were reviewed
with the IAB Board of Directors, who provided additional directional input while the work was in progress.
Key questions this report covers:
What do industry leaders see driving digital Where are future digital advertising campaigns
ad growth in the next three years? headed and what role is attribution expected
to play in future digital ad campaigns?
What does the industry believe is the future
of consumer identity (with growing direct-to- How does the digital ad value chain need to
consumer devices and services entering the evolve across key players in the ecosystem?
ecosystem, and the cookie and mobile identifier
environment changing)? What thematic consumer behavior shifts should
the industry understand and respond to?
6 PwC | IAB Outlook: 2021 Digital Ad Ecosystem
The consumer in focus
1
KEY HIGHLIGHTS
As ongoing battles for consumer time, attention and dollars escalate, organizations will
find that a consumer-first approach is imperative or risk losing them to competitors.
The consumer journey changed course during the COVID-19 pandemic. How consumers
engage with organizations and think about whom they trust with their data has evolved.
This section explores how marketers who expect to unlock new purchase norms require
more sophistication to better understand behavior and more appropriately monetize
product.
• Many brands and publishers need to think differently about how they engage
consumers and must up-level their consumer value exchange to remain viable.
• Consumer journeys have changed—attention fragmentation and compression
in decision-making are putting evolutionary pressure on traditional marketing funnel
evaluation criteria.
• Retail media is at the forefront of enabling direct business outcomes. In addition
to pivoting to performance-based outcomes, ads must deliver relevant information
that enhances (vs. detracts from) the consumer experience—the success metric
for retail media. The opportunity for close-looped measurement, clearly linking ad
exposure to sales, is another significant benefit.
7 PwC | IAB Outlook: 2021 Digital Ad EcosystemTake care of your consumers,
or your competitors will
The competition for consumer time increases with each new app,
site and service launched. The growth and decline of companies
can be attributed, in great part, to how well they engage with their
consumers to create differentiated and valuable experiences.
Across the industry there is a clear opportunity
to up-level the consumer value exchange to
one that fosters long-term consumer relevance
and value.
Internet advertising is projected to reach $150bn+ in 20241 in the United States. Beyond its financial
contributions to the economy, advertising is the bedrock of the free and open internet. Unlike any other
medium, advertising helps enable a connection between people and communities, provides access
to entertainment, enables and drives commerce, and allows for idea and information exchange across
geographic borders and socioeconomic boundaries.
While there are clear benefits to online experiences, there are also clear drawbacks consumers
encounter that can impair their perception of brands, including hate speech, misinformation, fraud
and more. Making the online environment a safe place where consumers and businesses thrive
requires careful cultivation of relationships to deliver mutually beneficial solutions for all players in
the ecosystem, including consumers.
Business leaders in the digital advertising ecosystem need to ask themselves a key question:
are we operating in a way that provides a clear value exchange to consumers in the long term?
1
PwC Entertainment and Media Outlook (data projected through 2024)
8 PwC | IAB Outlook: 2021 Digital Ad EcosystemDefining what “value” means
to consumers
Free services ... plus Personalized Contextually
Services that have discounts differentiated/
traditionally been “free” The consumer believes that a improved experiences
(e.g., linear TV), must still required action (e.g., sharing The consumer gets a
ensure ongoing relevance, additional data) is a fair desirable bonus for a
and differentiation from the trade for a discount on the certain action (e.g., loyalty
competition. product/service. programs) that feels
personalized/unique/
enhanced.
Consumers first1
59%
Of surveyed U.S. consumers
17%
Of surveyed U.S. consumers
indicated they would stop doing indicated they would stop doing
business with a company after business with a company after
several bad experiences just one bad experience
1
Source: PwC, Consumer Intelligence Series: Future of Customer Experience Survey, 2017/18
9 PwC | IAB Outlook: 2021 Digital Ad EcosystemThe consumer attention
war helps unlock new
purchase norms
Current identity, measurement and attribution models (including those
that use cookies and other third-party identifiers) are not perfect.
After the obsolescence of cookies and other identifiers used to track ads actually happens, many executives
expect that measurement will get more disjointed, attribution models will be upended and discerning ROI
will become harder. Organizations that do not understand—and have a plan to address—the impacts created
by the loss of ad-tracking capabilities for their business are unlikely to meet the changing needs of their
core stakeholders (including leadership, investors and consumers). By contrast, those organizations that
proactively address the challenges of identity resolution, securing attention and the changing consumer
journey pathways are much better positioned to protect their relevance (and growth) in the long term.
Identity and attribution models in the future can be developed to illuminate and effectively measure changing
consumer behavior in a way that creates a stronger foundation for future ecosystem performance and growth.
Consumer attention is increasingly splintered (e.g., engaging simultaneously with multiple devices; increasing
consumption of short-form content; often self-interrupting and then returning to the purchase path). Industry
leaders recognize these digital behaviors make attribution modeling a challenge ... even with cookies and
other identifiers. The future models and innovations in ad tracking must provide both better detail on the
consumer’s journey and do so more holistically, with consumer needs and expectations kept front and center.
The evolving and expanding publisher landscape
Publishers that demonstrate the ability to reach consumers at the point of purchase (or guide them there) with
relevant opportunities and recommendations are expected to benefit from new consumer purchase norms.
Adopting best-practice alternative solutions for ad targeting is driving the publisher pivot to first-party data
collection through direct-to-consumer relationships. While this fosters growth of higher and more walled
garden environments, it has provided security for some of the largest stakeholders.
Retail spotlight (“Retail media”)
Industry leaders interviewed see large retailers in a unique position to deliver greater value to customers,
while driving innovation. A growing number of retailers, including traditional brick-and-mortar companies,
are authenticating and listening to consumers … and becoming media sellers.
There is a clear opportunity for retailers to drive meaningful digital and digitally enabled consumer engagement
at the point of decision-making and purchase. These engagements are being enabled by advances in 5G,
augmented and virtual reality (AR and VR) experiences, influencer affiliate marketing, interactive purchase
experiences, one-click shopping and more.
Some grocery retailers have invested heavily in ad tech and payment capabilities required to make full use
of demand signals and first-party data. These investments will enable the grocery retailers to monetize their
connected digital ecosystem while using data to provide personalized experiences to customers.
The opportunity for closed-loop measurement, cleanly linked to sales at the point of exposure, is another
significant benefit retail media has at its core and is expected to have large ripples throughout the
ecosystem—including evolving partnerships with large agencies, partnering with demand and supply side
companies to develop ad tech capabilities, and increasing competition with established dominant digital
advertising competitors for marketers’ dollars.
• Executives interviewed anticipate that verticals (including consumer goods) that primarily rely on retail
for distribution will direct additional time and ad spend toward retail media.
• Partnership opportunities with Connected TV (CTV)/Over-The-Top (OTT)—including content streaming via
television like cooking shows— were highlighted as future focus areas for the industry.
10 PwC | IAB Outlook: 2021 Digital Ad EcosystemLeaders interviewed shared the following additional observations regarding the
post-COVID-19 consumer journey and their engagement strategies:
For many verticals and the brands within, the path from discovery to purchase is being compressed.
What could once have been a 30+ day decision-making time frame can be as simple and spontaneous
as a candy bar buy made at a brick-and-mortar checkout line. While brands work with media to quicken
the consumer’s steps toward the point of purchase, their anticipated return on marketing investment
(ROMI) increases.
Stakeholders must better understand the reasons for ad formats/creative favored by consumers. The
ability of marketers to better invest their media dollars is an area where executives had competing views:
• Some leaders see the rise of new publishers and • There is an expectation that more publishers
fragmentation of consumer attention as prime will pivot (given brand and agency pressure)
areas for agencies to help marketers and brands toward models that drive business outcomes
navigate the ecosystem. rather than media outcomes. Despite strong
headwinds, some executives interviewed believe
• Others highlight the broader industry trend
the industry cannot afford to take a step back
for insourcing marketing efforts. They indicate
when it comes to evolving attribution modeling
that, while agencies still have a role to play,
and keeping focus on clear outcomes.
the complexity associated with managing
brand/marketer data in context of the broader
ecosystem is one that does not support giving
spend decisions to agencies.
The pace of innovation and complexity in the ecosystem is unlikely to slow in the next few years.
Organizations will need continued investment to track changes in consumer sentiment, time and behavior
that directly impact where and how digital ad dollars are most effectively directed. Keeping focus on brand
safe environments will continue to inform advertising allocations, with artificial intelligence (AI) and other
technology helping enable insights at scale.
Organizations increasingly have the opportunity to focus on long-term customer value. Consumers
will continue to be empowered to drive how and where they engage with organizations—including
advertising-supported and advertising-free engagement models. Proactive efforts to retain customers,
predict and avoid churn, and optimize ad loads and bundles/subscription models delivered to consumers
are likely to rise on executive priority lists.
11 PwC | IAB Outlook: 2021 Digital Ad EcosystemConsumer sentiment watchlist:
The growing trust gap
An unanticipated consequence of increased consumer digital engagement
is a widening gap between businesses and consumer trust.
Consumers are unsure how their data is being captured, used and most importantly, protected. This
creates consumer anxiety around digital experiences and hesitancy in sharing data. Industry leaders
note that the vast majority of consumers choose to engage with digital content and digitally enabled
services in ways that suggest that what consumers say vs. what they actually do are not always aligned.
The trust gap can have significant industry implications. For example, consumers could reduce their use
of select digital platforms and applications—or even turn away from digital experiences more broadly.
Given that consumer data/knowledge and context help fuel relevant, personalized and useful
experiences online, an industry solution to the growing trust gap is critical to the long-term health
of the digital ad ecosystem. As part of the value exchange, customers are willing to part with their
data—but the experience received, and protections of their privacy, must match their expectations.
Data sharing1
76%
of global consumers indicate they think
36%
of consumers say they are
“sharing my personal information less comfortable sharing their
with companies is a necessary evil information now than they were
in today’s modern economy.” a year ago.
Social platforms and the media also contribute Bridge the gap1
85%
to consumer sentiment—and their trust, or lack
of trust, in whom they engage with online. Strong
content moderation and control policies will be key
to foster trust and motivate consumers to continue
to share data in a way that amplifies the value they
receive from online services.
of global consumers say they
Players in the ecosystem also need to take a wish “there were more companies
close look at how much data they actually need
I could trust with my data.”
to deliver relevant and personalized experiences
and watch how consumer sentiment continues
to evolve in this area.
Note about this topic: consumers tend to care about data privacy most when they are asked about it, hear about it or experience
a negative effect (e.g., overly intrusive ads) or are exposed to a data security breach. Interviewed leaders suggested that there is a
disconnect between the degree to which consumers say they care about data privacy and their actions when accessing content and
applications (where the vast majority opt in and share all requested information). Consumers’ lack of a comprehensive understanding
of the data value exchange can more easily be navigated when they clearly feel as though they can trust the organization and receive
differentiated, valuable experiences when sharing their information.
1
PwC Consumer Intelligence Series. Trusted Tech Survey, 2020
12 PwC | IAB Outlook: 2021 Digital Ad EcosystemWhat should organizations do about the consumer trust gap?
There are a few simple steps organizations can take to help drive improved security and transparency as
well as build trust that customer data is being used for the right reasons—to deliver relevant, impactful
experiences that consumers value. Trust on its own is not enough; delivering a clear value exchange and
strong, relevant, convenient and delightful experiences is also critical.
2. Prioritize and
1. Evaluate 3. Take action
communicate
Understand your current Scope and align on what Land and refine the model.
and desired future state. enhancements are needed Engage consumers and
Take an objective look at what to the model to modernize continue investments in
consumers think about your the trust equation. products and services to
organization today and how Consider regulatory changes operationalize efforts to
(if at all) you need to evolve and balance against make policy a reality.
in the future to meet their organizational purpose
shifting needs. and values.
Interviewed leader Interviewed leader Interviewed leader
perspective spotlight: perspective spotlight: perspective spotlight:
• Free services on their • Consumers may not • Transparency is key.
own may not meet fully engage in industry • Consumers will share their
consumer expectations efforts to provide data with organizations
in the future if they do not them with transparent they trust.
deliver relevant value-add communication around
• Organizations must be
experiences that reward how and where their
prepared to execute on
consumers for the data data is used—there is
their stated position.
they exchange. the continued opportunity
to find simple ways to
• It is critical to deliver a
• Ad-free models have
help close consumer great experience that
changed the assumptions
education and awareness appropriately protects
consumers have around
gaps. consumer data.
how they engage digital
content (and ad loads • Very few consumers click
need to reflect this). through/read privacy
• Brand safety and content notices—but they do listen
moderation continue to to their friends about which
rise in importance. companies to trust.
Sources: PwC, Consumer Intelligence series web reports, Consumers trust your tech even less than you think and Responsible AI is
even more essential during a crisis.
13 PwC | IAB Outlook: 2021 Digital Ad EcosystemForecasted growth
2
(in a highly fragmented and
uncertain environment)
KEY HIGHLIGHTS
There are risks and opportunities in defining and adopting future consumer identity
and attribution models, creating a direct-to-consumer imperative. More digitally
connected consumers are helping unlock digital advertising growth across formats.
Looking ahead, 5G presents an opportunity to innovate around consumer experiences.
• While there is an expected surge in out-of-home entertainment and travel once
the pandemic is controlled, the adopted and accelerated digital behaviors are
expected to stick. Ad experiences, particularly on mobile devices, video and eSports,
will become more immersive, driven by Augemented Reality (AR)/Virtual Reality
(VR)/5G.
• A number of industry leaders fear key industry players are ill-prepared for the loss of
third-party cookies and identifiers. For these leaders there is little comprehension of the
ramifications of these impending changes. Finding alternative solutions is top of mind.
14 PwC | IAB Outlook: 2021 Digital Ad EcosystemLessons learned from
2020—which new digital
behaviors will stick?
COVID-19 drove immeasurable disruption to the personal and professional
lives of consumers around the world. While the long-term mental and
physical health effects do not yet have clearly defined consequences,
early signs indicate that the pandemic will drive behavior changes and in
some cases, economic changes that are expected to last a lifetime.
78%
One clear trend for U.S. consumers is the acceleration
of digital adoption—particularly streaming video
content. Industry leaders interviewed estimate digital
adoption increased in a matter of weeks rather than
an anticipated 3+ years to reach the same scale. The of surveyed consumers1 indicated
accelerated rate at which consumers are embracing they were consuming more online
digital consumption creates real growth opportunities services during the pandemic.
—and risks—for the digital advertising ecosystem.
How is advertising spend in digital experiences expected to grow over the next
three years?
All information is for the U.S. market; global projections available upon request
Television and video: 70% of consumers1 eSports: This market experienced continued
indicate they are using their televisions more growth in online games and advertising, and
since the start of the pandemic. While roughly eSports advertising is forecasted to reach
half of this consumer set expects their TV $86m by 2024.2
use to taper once stay-at-home guidance
lifts, the behavior shift towards more digital Music and radio (digital): Radio advertising
experiences is expected to persist. Digital is expected to grow 7%; digital streaming
TV and internet video advertisements are advertising, 8.6%. Combined, these segments
forecasted to grow to over $34bn by 20242 are projected to reach $4.3bn by 2024.2
across both wired and mobile formats.
Podcasts: Podcasts are projected to grow
Mobile: 71% and 66% of consumers indicate 18.8%, reaching $1.6bn in U.S. advertising
they are using their smartphones and digital revenue by 2024.2
streaming devices more, respectively.1
Mobile-delivered internet ads are projected Virtual reality: VR has a 21.9% forecasted
to represent $117bn by 2024.2 Even after growth rate and is projected to reach $1.5bn
stay-at-home orders lift and vaccines are in revenue (with no/limited ads at this time)
distributed, market growth is expected to by 2024.2 (On a related note, while AR growth
continue with more immersive mobile ad forecasts vary, the opportunity to transform
experiences that, for example, add value shopping [interactive trial] gaming and
to in-person consumer experiences. connection experiences is an anticipated
growth area.)
1
PwC Consumer Intelligence Series | Adapting a digital lifestyle eases sheltering in place. July 2020 survey of 1,000 U.S. consumers
2
PwC Entertainment and Media Outlook (data projected through 2024)
15 PwC | IAB Outlook: 2021 Digital Ad EcosystemWhat does a highly engaged, digitally connected consumer base mean for digital advertising?
Interviewed leaders share the expectation that advertising dollars will move even more quickly to digital
formats, with increased digital consumer consumption (and time) accelerating the continued flow of
advertising revenue (as a percent of total advertising) to digital advertising formats. Digital ad dollars as
a percentage of ad spend are projected to more than double in a ten-year period.1
U.S. Advertising U.S. Advertising
Revenue 20151 Revenue Projected 20241
Digital
advertising
revenue
Non-digital Digital
Non-digital
advertising advertising
advertising
revenue revenue
revenue
What are the implications of COVID-19 for those in the digital advertising ecosystem?
While all leaders agree that digital adoption is here to stay, some expect that after critical mass is reached
with the vaccine, consumers will flock to live/in-person experiences and spend less time at home. Mobile
experiences that amplify in-person experiences will drive and benefit from that shift.
How are organizations expected to change, given what occurred in the pandemic?
Many organizations faced considerable revenue shortfalls when COVID-19 first hit (e.g., airlines, hotels),
leading to slashed marketing budgets and short-term advertising spending drops across the ecosystem.
Longer term, this is expected to add industry pressure and focus on the need for:
• agility in directing (and redirecting) ad spend: reduced focus on locking in major ad buys
months or years in advance that have less flexibility for shifting business needs over the duration
of the contract period
• increased ability to clearly show the outcomes that marketing dollars enable in measurable ways,
particularly when tied to a clear sense of reliable, trusted consumer identity measures
• scenario planning and more agile monitoring of consumer behavior (and corresponding ad spend)
• increased use of data and technology (including predictive analytics and machine learning [ML]/AI,
cloud and CDPs) and programmatically supported ad buying models
• flexible operating models that allow for the ability to scale up and down across products and services
with shorter turnaround times
• some organizations adding new/evolved monetization flows (e.g., subscription and ad models,
new bundles).
Other organizations experienced massive growth during COVID-19 (including CTV and online retail),
with some struggling to pace demand from consumers and business partners. While the same general
implications apply to these organizations, they likely will face added pressure in supply chain, customer
service and more, which will redirect and shape their focus areas in the years to come.
1
PwC Entertainment and Media Outlook (data projected through 2024)
16 PwC | IAB Outlook: 2021 Digital Ad EcosystemRisks and opportunities
in defining and adopting
future consumer identity
and attribution models
Key industry opportunities
• Use the need for new identity models to compel development of a new digital advertising value
exchange for consumers, brands, publishers, agencies, marketers and key supporting ecosystem
partners (e.g., Ad Tech)
• Embrace what is possible through ML and AI—do not permit outdated, linear ad models (like broad
customer segments) to unduly impact the future state of the ecosystem
• Seek industry alignment on the key component parts of consumer identity (e.g., age brackets for
demographics across ad formats, granularity of geographic targeting, baseline attribution models)
for foundational metrics that can be built upon for more sophisticated analytical models (up to
“segment of one” targeting). Cross-industry efforts, like the Partnership for Responsible Addressable
Media (PRAM), have potential to help unify the industry
• Leverage the cloud to compliantly and securely share data with trusted partners to create a complete
view of consumer journeys and marketing outcomes in a data-protected way
• Design with the end in mind—revisit the true “marketing funnel” by industry and embrace new buying
motions that reach consumers at the point of decision-making, including retail media and performance
video formats
17 PwC | IAB Outlook: 2021 Digital Ad EcosystemKey industry risks
• Interviewees believe that the investments needed to optimize identity and attribution models are
underfunded. Without addressability, ads may become less relevant to consumers and create a
negative experience in how consumers engage online with some organizations. This in turn could
create a snowball effect, where consumer sentiment towards advertising leads them to avoid the
advertising-supported experiences that enable a free and open internet and help many small to
mid-sized businesses already negatively impacted by the pandemic.
• Industry solutions are built in silos that do not seamlessly streamline how data is transacted for the
long-term health of the digital advertising and marketing value chain.
• Some organizations lag investment in identity solutions and are unprepared for new innovative
mobile identity and cookie solutions.
• Given that global and U.S. regulations around consumer data and privacy continue to evolve, solutions
are developed that have to be re-architected once regulations are in place (driving added costs and
complexity in arriving at industry-accepted identity solution and attribution models).
• As additional publishers, including OTT services, smart devices and retail, enter the digital
advertising ecosystem in a meaningful way, the pace of innovation and complexity may prove too
challenging to effectively scale and appropriately integrate into identity solutions.
There are relevant, elegant models that exist in the
current ecosystem around consumer identity. Use
cases in place today include CTV and retail media.
18 PwC | IAB Outlook: 2021 Digital Ad EcosystemNew consumer identity
patterns foster a direct-
to-consumer imperative
The evolution of consumer identity and attribution, driven by the potential
of a cookie-less world, have added emphasis on direct-to-consumer
(DTC) models.
Companies that directly engage consumers with authentic brand messages, content, services and
experiences are expected to see ancillary benefits that include:
• driving more predictable, reliable models in how organizations interact with consumers
• reducing the risk of content and/or advertising being placed in an inappropriate or harmful location
• reducing the risk of fraud in the ecosystem and driving better-performing advertisements when they
are grounded in the ability to directly connect with consumers
• ensuring content is viewed with optimal formats and delivery mechanisms and providing the opportunity
for standard DTC measurement across the entire ecosystem
• empowering the organization to deeply engage with and understand their consumers to differentiate
experiences in a targeted and personalized way
• making consumers visible across the profiles of how they engage companies (e.g., as a mobile provider,
media company, etc.) and developing tailored programs to understand and optimize the lifetime value of
those consumers.
The emphasis on DTC models and concerns
about data sharing and privacy are leading to
Masked engagement online
an increase in the number of walled gardens—
with higher walls. The ability to mask consumer engagement,
while still in a nascent stage, offers the
As walled gardens are environments where following benefit: what is authenticated
organizations store and protect the consumer data to one organization could be masked to
(including how and when consumers engage with others. Masking consumer engagement is a
their organization online), we see walled gardens potential innovation area that IAB sees as a
as a key evolving part of the digital advertising and possible shift in the coming years. Password
marketing ecosystem in the future. The ability to storage sites and authenticating to other
sites using social, commerce and email logins
protect consumer data and allow organizations to
are one permutation of “secondary direct”
better prepare for added regulations is mandatory
consumer engagement experiences. These
for future success. experiences have a clear opportunity to grow,
While a clear trend and growth area, walled given consumer pain points with too many
gardens potentially add to the risk of fragmented logins/too many direct accounts—a situation
that will become even more complex as new
data. Disconnected data/ads delivered without
DTC services come online.
a clear understanding of the consumer can drive
delivery risk of excessive ads, ads that do not align
to marketing and brand objectives, and ads that
are out of context or not relevant to the consumer.
Ultimately, suboptimal advertising experiences
could create a frustrating enough experience for
the consumer who, given the choice, may decide
to spend less time engaging with ad-based
digital experiences.
19 PwC | IAB Outlook: 2021 Digital Ad Ecosystem5G: Innovating digital
consumer experience
Enterprise and consumer access to 5G is starting to hit critical mass
in key global markets, and 5G is expected to add over $1.3tn to the
global economy by 2031 across industries.1
The key opportunities with 5G for the digital advertising and marketing ecosystem are grounded in more
reliable internet connections in more places. 5G enhances the ability for consumers to watch/engage with
higher-data-requirement content and services on the go. 5G also helps unlock physical world experience
enhancements, including value-add marketing channels.
What innovations are 5G expected to unlock that will help improve the consumer experience?
Mobile and connected devices: Investments Video games (including eSports): There will be
will continue in new mobile applications, including an expansion of AR and VR, including connecting
applications that enhance other experiences fans to more immersive eSport experiences.
(for example, AR experiences that enhance in-
person live events, connected devices that can be
Digital video services and connected TV: Media
personalized to an audience or unique use case).
organizations are expected to continue to find the
right DTC models. In the next three years, leaders
Up-sell and cross-sell marketing opportunities: see continued innovation, new services/packages/
There will be an opportunity for rich and interactive offers, and potential consolidation to capture market
experiences. Allow marketers to tap into channels share and avoid subscription fatigue for consumers.
like gaming and eSports and help support new
and immersive experiences in locations such as
Payment services as an experience enabler:
restaurants, retail locations, theaters, theme parks,
In addition to continued investment to add value to
etc. (e.g., in restaurant interactive electronic menus
consumers beyond the transactional components
featuring video, augmented reality, or even VR
of digital commerce, innovation in how payment
visits to the kitchen to hear firsthand about how
services engage consumers and the benefits
certain specialty dishes are prepared).
associated with using authenticated payment
services are expected to evolve.
5G-powered consumer and media industry expected to reach U.S. $254bn by 2030.
(2019 values)
U.S. $530bn 5G-powered healthcare
U.S. $330bn 5G-powered smart utilities
Total impact 5G-powered consumer
U.S. $254bn
U.S. $1.3tn and media applications
5G-powered industrial
U.S. $134bn manufacturing
5G-powered financial-services
U.S. $85bn applications
1
PwC Global Economic Impact of 5G
20 PwC | IAB Outlook: 2021 Digital Ad EcosystemUnlocking the value of changes
3
that are impacting the digital
advertising-supported ecosystem
As marketing is redefined and new consumer purchasing paths are captured, currency
and measurement move from impressions to outcomes. Future innovation will require
both humans and machines working in tandem. How will stakeholders (brands,
agencies, publishers and their full supply chains) prioritize new ways of working?
KEY HIGHLIGHTS
• Growth will increasingly come from ads that enable direct business outcomes. The ad
format—and getting the experience right—is cited as foundational to protecting current
revenue and enabling growth. Ad formats that cannot be attributed to real humans in
brand-safe environments are expected to lose share to those that are brand safe and
land at the point of decision-making in the consumer journey.
• On the future role of agencies, industry leaders are split: some expect that the growth
of new publishers and a continual shift in consumer time are clear indicators that
agencies have a role to play in helping marketers and brands navigate the ecosystem.
Others believe that while agencies still have a role to play, the complexity associated
with managing brand/marketer data in the context of the broader ecosystem is one
that does not support fully outsourcing spend decisions to agencies.
21 PwC | IAB Outlook: 2021 Digital Ad Ecosystem 21 PwC | IAB Outlook: 2021 Digital Ad EcosystemCapturing new consumer
purchasing paths: Moving
from impressions to outcomes
as marketing is redefined
Historically, the industry drew very clear lines around marketing spend, separating broad awareness-
building campaigns from performance-oriented ones. These legacy boundaries face pressure in an
environment where CMOs need to justify spend and show ROI to their CFO and C-suite team.
While this may be an area that takes a step back (to accommodate for new data and attribution models)
before it takes a step forward (broader adoption of business outcome-oriented marketing spend),
interviewed leaders see outcome-based marketing gaining ad share. Effective outcome-based marketing
can also help combat ad fraud and waste in the ecosystem.
The current industry inflection point—and opportunity to redefine customer identity and attribution models—
also provides the opportunity to fundamentally restructure how “buy-side” and “sell-side” players in the
ecosystem interact to pivot away from impressions and reach, driving toward incentives better aligned to
business outcomes and improved consumer experiences across the ecosystem.
The need to drive outcomes for digital ad players is amplified by consumer experience shifts
that create the opportunity to align what is right for the industry with what consumers expect—
relevant, non-disruptive and personalized advertising. Modern technology-enabled models are needed
to effectively understand new consumer purchasing paths in today’s digitally connected environment.
Consumer experience shifts Key digital ad ecosystem shifts to respond
• Direct-to-consumer engagement and active signal
listening and/or engagement with consumers through
Increased expectations
trusted partners
Consumers want more value, experiences or
rewards for less overall time and/or money. • Clear and differentiated consumer value exchange
grounded in a holistic view of the consumer experience
Higher stakes • Increased focus on the consumer value exchange
Many consumers seek the best value and • Efforts to measure long-term customer value and use it
experience (for the least effort and cost), to fund customer acquisition/retention programs
and are unafraid to switch services, products • Correlation between listening engine efforts and
and providers that do not meet their needs. innovation in product, service, content, experience
Increasingly costly customer
• Innovation in marketing efforts, including the channels,
acquisition efforts
creative formats, delivery mechanisms and models
Consumer engagement continues to
(outcome based/ROI focused) used to drive
grow in complexity. In an environment
marketing ROI
with shifting data models, finding relevant
consumers is expected to continue to • Increased focus on customer retention and customers
drive increases in acquisition costs. as brand advocates (e.g., referral programs)
Expectations of faster and easier • Innovation in the value proposition across online
realized value and highly personalized and offline experiences
and beneficial experiences • Continued investments in service reliability (including
Industry leaders continue to shape an those enabled by 5G) and quality
environment where consumers expect
• Ongoing efforts to deliver highly personalized
relevant, efficient, seamless experiences
and relevant experiences
online that add value to their lives.
22 PwC | IAB Outlook: 2021 Digital Ad EcosystemSummarizing the key formats and focus areas driving outcome-based marketing:
Retail media: Adding value to how consumers engage (e.g., through e-commerce point-of-sale ad
opportunities and enabling consumer recommendations) will continue to fuel the growth of retailer
as digital ad publisher. Bringing together online and in-store retail through authenticated immersive
experiences will support continued engagement. This includes use cases such as AR helping consumers
visualize items in their homes or virtually “try on” products before purchasing.
Connected television and digital video: This includes measuring actual engagement with digital
TV advertisements and the opportunity to connect TV and commerce experiences. Original Equipment
Manufacturer (OEM) organizations are seeing consumers pause ads on their digital TV to research and
then purchase the product through other devices. Shoppable TV ads are a potential future focus area,
especially for target verticals. This focus area will need to ensure ads deliver a meaningful value exchange,
without disrupting the viewing experience.
New approaches to local yet contextual advertisements enabled by 5G: This includes cross-sell/
up-sell, adding experiential elements to consumer physical world interactions that can be enhanced with
storytelling, “edutainment” and advertising in context of their experience(s).
Extended direct partnerships with influencers: This includes collaboration between larger brands
and small businesses, such as special event purchases or delivery. Expanded brand engagement with
influencers would help drive the production and selection of the brand’s advertised products and services.
Continued growth in performance marketing: This includes search/discovery advertising that lends
itself to direct purchase pattern tracing.
Evolved definitions and norms around consumer journeys: Across formats, a deep understanding of
the consumer journey and the multiple routes consumers take in their purchasing decisions (across discover,
research and buy motions) are expected to underpin some outcome-based marketing strategies.
Key outcome-based marketing enablers
Artificial Cloud (and Real-time Augmented and
intelligence/ unlocking the analytics virtual reality
machine learning power of data) (shopper)
Intelligent In-context Mobile Local/
process ad delivery engagement geo-sensors
automation (apps, services)
What does outcome-based marketing mean for ad sales?
• A number of industry leaders say they expect the way that advertising is bought (and sold)
will evolve in the future.
• They believe that direct, programmatic and hybrid buying motions will be part of the portfolio
for most organizations.
• As consumer identity and attribution models evolve, the method of transacting on outcome-oriented
models in a data-compliant way is likely to be less feasible without direct discussions/engagement
across all ecosystem participants in the shorter term. Longer-term outcome-based ad sales—with
appropriate data-sharing models—could be largely automated.
23 PwC | IAB Outlook: 2021 Digital Ad EcosystemHuman + machine: Why
digital advertising needs an
“and” strategy
The current industry inflection point comes at a very opportune time
in the state of technology.
Secure cloud environments provide supply- and demand-side organizations with unprecedented opportunity
to innovate and collaborate. Automation, 5G, ML, AI and natural language processing (NLP) capabilities afford
ways to streamline processes and create space and time for more creative, value-driven tasks (e.g., data
analysis and implementation of recommendations).
To benefit from what technology enables, increased investments in the following
are expected:
• digital advertising upskilling and learning initiatives, particularly around harnessing data and analytics
• “acqui-hiring,” i.e., acquiring companies with skilled technical resources to augment the labor force
• continued merger-and-acquisition activity to round out capabilities, bring wholesale solutions and
expertise to the team, and provide robust organizational capabilities across the value chain
• evolving engagement and expectations of partners, including where and how data is shared and the
domain knowledge and skillsets sought from collaborators and partners in the ecosystem
• engagement of key industry players collaborating to solve industry-wide problems, including data
sharing and measurement/attribution model innovation
• data governance and stewardship models.
The digital advertising models of the future
require a prudent balance of human expertise
and machine capabilities.
Technology has the potential to enhance the industry and allow key players to engage more efficiently
and effectively to deliver an improved consumer experience. There are challenges in getting to the
right long-term, data-enabled value chain.
• There is an unclear path to a balance of industry-accepted metrics that support both simple and highly
complex marketing needs around identity and attribution
• There is a need for broad industry design and adoption of value chains that meet the needs of all key
industry players against clear, aligned outcomes
• Regulatory considerations are evolving and while design can be done with the presumption of where
standards will land, development efforts will need to be refreshed as new standards emerge
• There is a need to get the right technology-enabled operating model in place to enhance the buying motion
across direct, programmatic and hybrid sales motions (inclusive of engaging and supporting partners)
• Innovation investments, enabled by consistent focus on capability development and industry upskilling, vary
widely across industry players, and the ability of key participants to “pace” to where the industry is evolving
poses non-trivial risk to a cohesive future solution
24 PwC | IAB Outlook: 2021 Digital Ad EcosystemInnovation priorities for key
digital ad participants
With the right investment and approach, all players can benefit from
intentional and purpose-built advertisements that elevate, rather than
negatively impact, the consumer experience.
In cases where ad loads become disruptive, irrelevant or frustrating, there are clear cases where consumers
demonstrate a willingness to pay for a subscription model, e.g., ad-free streaming services.
In addition to continued focus on the value exchange and optimized ads, interviewed leaders also highlighted
continued focus on tracking (and adopting when appropriate for the business) innovation priorities to help
create immersive and relevant advertising-supported experiences.
• The opportunity to translate facial recognition consumers and deliver differentiated experiences.
technology (combined with sentiment analysis) This can include access, content and communities
allows marketers to understand consumer of interest solutions that help make lives easier
preferences and behaviors in unprecedented ways. for consumers. One potential example is the
This requires compliance with privacy guidelines ability to purchase a recipe seen on a CTV cooking
and ensuring consumer consent to deliver more show by clicking once on the consumer’s mobile
valuable advertising experiences. device, with ingredients adjusted to the size of
• Use cases enabled by connected devices, such their household and what they already have in their
as the autonomous car, can reach consumers at smart fridge.
the right point in their purchasing journeys. • AR/VR has the potential to enable shopping
• Use cases enabled by 5G adoption, including experiences and help replicate or enhance in-
better user data capture and delivery of person experiences and live events. These formats
recommendations and experiences closer to also can bring consumers virtually together to
consumer real-world consumption, are enhancing share in experiences while physically apart.
potential relevance of ad loads. • Gaming (including eSports) can provide (from a
• There is an opportunity to think differently about standalone growth perspective) more consumers,
subscription models and commerce revenue, more time from existing consumers, and innovative
such as evolved bundles and partnership opportunities in relevant brand messages and ad
opportunities that provide “must buy” offerings for loads.
Where do industry leaders believe organizations should focus over the next
few years?
All players in the ecosystem should:
• continue to understand and seek opportunities to
enhance the consumer value exchange
• participate in efforts to define and adopt future
consumer identity and attribution models
• increase use of business outcome-based
pricing models
• invest in upskilling efforts to enable growth and
help the organization understand and embrace
new industry models
• invest in relationships with trusted partners across
the value chain (to deliver more complete, immersive,
differentiated and meaningful experiences)
25 PwC | IAB Outlook: 2021 Digital Ad EcosystemPriority actions recommended for ecosystem participants based on leader interviews
Brands/Marketers
• Embrace the opportunity to transform and innovate the approach to advertising, including the mix
of in-house and agency-supported marketing efforts.
• Embrace digital-first attribution models and metrics.
• Invest in Customer Relationship Management (CRM)/Customer Data Platform (CDP) and enabling
technology to better understand and optimize marketing dollars.
• Seize opportunities to think like, and in some cases be like, a publisher in how they engage
consumers.
• Continue to hold partners accountable.
• Seize opportunities to refresh efforts around brand message (in context of broader business
purpose initiatives) and current consumer journey and behavior patterns that are increasingly
digitally enabled (if not fully digital).
• Refresh how they approach the value chain — hold agencies, publishers and technology providers
accountable for supporting achievement of brand/business objectives and outcomes in brand-safe
environments.
Agencies
• Continue to up-level offerings to serve as a trusted advisor to brands to understand the consumer,
publisher and technology landscape grounded in data and innovation (including experimentation
with delivery mechanisms and formats).
• Use your ability to help orchestrate campaigns that achieve business outcomes and drive the right
solutions for marketer/brand needs.
• Seize opportunities to continue to optimize partner and publisher relationships and continue
innovations in collaboration, tech and data to increase agility and efficacy of ad planning, creative
and management efforts.
• Continue investment in technology and data infrastructure and solutions, in addition to upskilling
and capitalizing on partnerships across the ecosystem.
26 PwC | IAB Outlook: 2021 Digital Ad EcosystemPriority actions recommended for ecosystem participants based on leader interviews
Publishers (including OEM manufacturers, telco/media and retail/media)
• Develop (or protect) a good, often direct, relationship with the consumer and provide an
experience that delivers clear value to the consumer. This includes educating consumers
on how their data is used and the benefits of opting in to share information about themselves.
By sharing this information, the consumer will have access to additional content and experiences,
and will receive relevant and useful advertisements.
• Invest in continued innovation in products, services and ad formats, and engagement with
partners in co-innovation of consumer experience and value.
• Refine the operating model and supporting technology for transacting ad sales (direct,
programmatic, hybrid) and engaging in the evolving ecosystem on identity and attribution
across full-stack value-chain lenses.
• Continue investment in helping partners be successful at the intersection of their solutions will
be needed, particularly as it relates to consumer experience, right-sized ad formats, content
and native strategic ad planning.
Technology providers (digital advertising and marketing)
• Continue to educate and help the industry unlock the innovation potential enabled by technology.
This includes unlocking the power of cloud, AI, NLP and ML for use cases like video content
recognition to support brand safety and advertising as an enabler of home automation efforts.
• Help develop solutions to address shifting regulatory standards in a scaled way.
• Continue investment in partnerships and industry initiatives designed to optimize consumer
identity and attribution models enabled by compliant data exchange.
• Curate and refine industry solutions, and help partners drive cost out of managing digital
advertising and marketing efforts, while bringing more agile tools to managing marketing
budgets and outcome achievement.
27 PwC | IAB Outlook: 2021 Digital Ad EcosystemAdditional contrasting points of view uncovered in the interviews:
Degree to which Some industry players are on the cutting edge and going all-in on innovation
innovation should be investments, while others are taking a wait-and-see approach and will likely
prioritized follow the leaders later.
Concern for the Companies with first-party data are less concerned than small businesses
deprecation of cookies that rely on targeting. Some are exploring new identity models ... and some
are stalling.
How and where to Several executives shared that the biggest opportunity for the industry
collaborate is collaboration. However, industry leaders have different appetites for
collaborating on various focus areas. For example, some are eager to
collaborate on data privacy and brand safety, as these impact everyone in
the ecosystem, while others are taking a more passive approach and plan
to react to legislation and new industry standards rather than proactively
collaborate to help inform and shape them.
The extent to which While gaining added attention, the very real challenges of supporting (with
content moderation humans and machines) the reality of fully brand-safe environments is a
becomes a focal point focus area for many organizations. The question of which publishers
for publishers to have the appropriate policies and operating models to effectively manage
protect audience (and brand-safe environments is expected to influence ad spend in the future.
advertising spend) Some organizations are waiting for regulatory guidance, while others are
pacing ahead of regulation.
Who should be in Some executives questioned whether established Ad Tech providers—
the driver’s seat on or ecosystem participants with a profit incentive to benefit from identification
creating the future of and attribution models—should drive efforts. Others believe large (established)
consumer identity and incumbents and Ad Tech providers have a mission imperative to continue
attribution models to play a leadership role in driving identity and attribution solutions. While
industry groups clearly have a potential role to play, which industry associations
(and whether industry groups will move at the speed and precision required)
received opposing perspectives from interviewees.
The role and value Some industry leaders view partners as crucial to their long-term strategy
given to partners and are engaging them in efforts to refine identity models. Others highlighted
concerns with partners dedicating the appropriate diligence to cohesive
experiences online that elevate, and do not distract from, the consumer
experience; these leaders indicated their intent to collaborate/share less
(vs. more) information in an uncertain regulatory environment.
The role agencies play Many leaders see agencies faced with the opportunity to understand and
in the future help unlock a complex advertising landscape as a trusted advisor to brands.
Others cite marketing in-sourcing (which has faced skill and scale gaps for
some organizations and had success with others) driving pivots in the role that
agencies play in the future. What leaders did agree on is that the pace of change
will continue to accelerate, and the industry is growing more, not less, complex.
Organizations, including agencies, able to help brands navigate the environment
and drive real returns on marketing spend have a clear role in the future.
The extent to which the Ad spend has a close correlation to GDP growth and economic performance.
economy, and differences While the industry saw a K-shaped recovery in 2020 (some segments
in recovery across continued to grow in the pandemic, and others faced stark declines), the shape
socioeconomic groups of of recovery in the future—particularly in context of the innovation imperatives
consumers, will enable and industry shifts—is not clear.
even recovery and growth
across segments
28 PwC | IAB Outlook: 2021 Digital Ad EcosystemYou can also read
